Franchising 101: How To Make Millions Through Starting / Buying Existing Franchise Businesses w/ Brian Beers

All right. Mr. Brian Beers, welcome back to the Action Academy man. Good to have you back.

Yeah, . Thanks for inviting me. I feel honored now that this podcast is big and famous.

Oh, yeah. I can only get as big as business as beers, so it's just step by step. But you and I both kinda started our podcasting journey at around similar marks and around similar times. And in the very beginning we were both figuring out our voice, our branding, our messaging that we wanted to portray to the audience for both of our shows and for both of our brands. And now I feel we've gone. Gotten a really good idea of the messaging that we wanna portray. So I want to go into kind of your transition from being somebody that was an owner of auto shops and an owner of these franchises, to now creating the brand and the personality around franchisees and franchising in general. Can you kinda walk us through that transition and how you've gone about building that?

Yeah. So I guess the core of it is that, I've been in, franchising's, like in my blood. I've, my family's been in franchising for over 45 years. If you count my, my, my dad's uncle, or it's 60 years or something. It's been in our family forever. So I've grown up with it. And yeah, so I, for those who don't know, my backstory, we run 30 automotive shops here in Philly and Jersey area. And really we took it over from a, like a smaller six, six location, company to now 30. We have, 200 employees about to do about 36 million in revenue. And we'll grow. We're gonna continue to grow this year. We're adding new locations, we're adding revenue, building the team out. And I've had a lot of success in, in, in the business. We've also started two other franchises bought into 'em that both Be considered a big failures in, in my opinion we lost a bunch of money and, in retrospect I, would've done it a little bit differently. And I think Franchising's great. I think you can build tremendous wealth with it. I think you can create, whatever lifestyle you, you want to eventually get to Franchise is a great way to get there. And so anyway, now I've pivoted to, I'm pretty active on Twitter, my podcast, and now the message shifted too to really not only share my story, but to teach other people. How did they do this? Like, how do you find a franchise? Who does it fit? What are the pros and the cons? What's the best way to, to grow within one, right? You get your foot in one and then how do you grow? Ultimately how do you scale a business to be whatever size you want it to be? No one, not everyone's gotta be the size that we're at. Some people can, can live a great life and build, have everything they want at a much smaller, easier advantage company. And there's other people that want, 500 locations totally possible. So anyhow, I really enjoy teaching people about it. Not a lot of people are in the space are talking about it. And if they. Almost none of 'em have the experience that I do in terms of like actually running a franchise business. A lot of the guys that talk about it, maybe they had one or two or smaller, I'm probably one of the top experience-wise

as well. I would completely agree with that. Coming from somebody that. Owns real estate, you own stocks, you owned franchises. Can you talk a little bit about the asset class in general and why somebody should franchise? Maybe give a pros and cons list for somebody that's listening. Yeah, because think back to the people that are listening to the show right now. Maybe co some of them own rental properties, maybe some of them own. Multi-family, maybe some of them own a laundromat or a car wash. This is the, this is the format that we follow for this passive income generation to earn our freedom. Why franchising? Why this method? What are the pros and cons of this?

Yeah. So the franchising there's a spectrum, right? And so in, in many different ways a spectrum in terms of, I dunno, like I mentioned before, the size that you want it to be. It can be a single unit person who bought themselves a job, right? And they have some freedom, their income is directly tied to the amount of work they put in. Someone who builds an executive type business is like where I'm at, where you build a team, right? , my time is less correlated to our success because I've built it up and then the finally is like the investor, the board, right? Somebody who's really putting their capital to use in order to open up locations. And a team really runs all the day to day. And then obviously it's like infinitely scalable. And it, it really depends, like buying a franchise is not. Buying real estate, like buying into a franchise you're buying a business, right? You're starting a business, right? And a business requires work. It is not easy, right? There are definitely franchises that lend themselves to have. More benefits to people that wanna take a less active role, right? We may call it semi absentee, or, I like to call it kind of executive. Where it ba basically means, you can set the vision, you hire, you hire the right people, you still gotta hold 'em accountable, though. right? It's not the type of thing that you just buy and then, oh yeah, it just like prints money for me.

But that doesn't really exist anywhere. Even that's a facade.

Real estate. People say, oh, real estate's passive, but it's not really, not like you gotta do a lot of work to, unless you invest in like syndications so just keep that in mind as a footnote here or whatever. Yeah. Then some of the pros and cons. So the biggest pro is you get like a business in a box. So you don't have to go out and reinvent a wheel. You don't have to come up with this new problem. Maybe you're not like the most creative person that's okay. Like you're not, your job is not to be creative. Your job is to identify that, hey, there's a need in this market. Product or service, and this company has already developed a solution. They, They wrote the playbook, they wrote everything I need to do and my job is to follow the playbook, right? Whether that's, I'm gonna do this marketing, we're gonna do the things in this certain manner, right? That is the pro, it's a business in a box. And as a franchisee you really focus 95% of your time on, on operations, which is driving, how do we. How do we drive sales? How do we convert those sales by following a process or convert those leads into customers? How do we make sure we deliver on our promise and make sure everybody has a good experience? , that's 95% of your job. The franchisor takes care of all the marketing for the most part. Like you pay a percentage of your sales into this fund, and then the franchisor will, they're the ones that build out the website. They build out the brand. Change the brand up like Midas. We've changed like the mascot of the brand multiple times since I've been involved. Like they handle all that stuff. They're the ones that'll shop on TV and get you on and make the videos and get you on YouTube and SEO and Pandora and all this stuff that like I know nothing about, I care, I really don't care about. All I want is I want my phone to ring. Like I don't care how they make the phone ring. I want the phone to ring and then I want my team to go in and be really. Taking that phone call and turn it into a visit, turn that visit, turn it into sale, make sure they have a good experience. So they come back. And then it's a cycle. And so you get the business in the box, you get the playbook, you get the lead gen. And then it's like the systems, the processes, the partnership. Like you've got a community, we're, you're bigger communities, you join a franchise, you were like instantly part of a brand new community. Of other franchisees who were all just like you. They were in the same spot that you were at figuring it out. They all want to, they all wanna help each other too. Franchisees are more than willing to help other franchisees because like the stronger you get as a group and the more sales all of you generate, the stronger the brand comes, right? The more money that has available to spend on marketing. The more respected a brand comes, the more locations, the higher multiple that they could sell it at. So like you've got these like instant partners to help. , hiring processes and best sales processes and pricing and compensation and like, all this stuff. I I got a tons of friends in, in Midas who we text each other all the time with questions, problems, solutions, ideas. And, for me, like I, I I love having that. I don't wanna be alone. Trying to figure it out all myself. Like I, I want people to help me and I'm gonna help in return. So

that is another, that's another part of real estate investing is like you do have the communities out there, right? But for the most part, you have a lot of people that are lone wolfing real estate investing. Maybe they read the books, maybe they listen to this podcast and they have a couple of properties, but there's not that community attached to. Necessarily. So I really like that proponent of it because you can immediately go in where it's a win-win situation, and everyone is not. Everyone's not gatekeeping. Everyone's very open and fluid with the information share and the value exchange. I really like that. So for somebody I'm putting all this in I know it's apples to oranges. And this is more of a business conversation and we're gonna get more into that advanced and higher level business metrics in your second, but I just really wanna lay the groundwork for somebody that's listening that may be unfamiliar with how all of this works in general. So you, I like what you said about The degrees of passivity, right? We have levels of passivity. It's a spectrum. It's not it's not A or B. There's a lot of gray area in between. So somebody buys a rental property, it prints out 200 to 500 net cash flow per month. People buy an Airbnb, maybe it prints out two to $3,000 a month. People buy a laundromat. Maybe it's another two to 3000. What is a normal return somebody can expect from buying a franchise? And just as a rule of thumb, coming in for somebody that has a W2 job, maybe how intensive do they have to be to get this thing off of the ground? I know you're gonna say it depends, but we can expand on that

yeah. Yeah. It depends. So I'll give you a range. So shocker, for example in, in automotive repair business, right? It's gonna cost. I dunno, 2 50, 3 50 could be up to $400,000. It really, even that depends in our case on, are you outfitting from scratch? Are you buying like an existing and rebranding?

We'll say buying an existing and in rebranding. Yeah, just for the, so

I buy an independent shop. It's got lifts, it's got compressors, I gotta put signs on it. I gotta upgrade a bunch of stuff. I probably gotta fix the roof and I'd probably spend 200. Yeah, that's like a 2, 200, 2 50 to get that thing. Looking pretty good that I'm like proud of it. That thing should be able to make a hundred grand a year, 150 grand a year on average. Our ranges from, we have stores that lose a hundred grand that are recently purchased that we need to fix. We have stores that make. 300,000, 400,000. And but on average about a hundred grand on, a $250,000 investment.

Okay. So just to clarify, this is a hundred thousand, 200,000, 300,000 net into owner pocket, not gross revenue. Yeah. Correct. Okay. That's a no-brainer. It's a no freaking brainer man. It's

a business, right? It's a business. No, it is a business. There are businesses you could get into a cleaning, like a cleaning franchise is like a great example that, people can get. It's a little bit more passive in ways. And we could talk about what, what makes it passive. A lot of those, you can get into 'em for let's call it a hundred to 150,000, like all in it costs to start up one of these franchises. You get like a territory and those, you could probably. A similar number. Maybe it's 60 the first year, maybe it's 80 the next year, maybe it's, you can get up to 120,000. There's some that, there's some that do more. Now they're gonna have less sales than like an automotive shop. Their margins are gonna be much higher. Cuz they don't have the overhead, they don't have all the CapEx and all the equipment. And so that one could be, you could get a hundred percent return on your cash. And it puts, it's running a business still and. Yeah, they vary. They vary. But like buying a franchise, there's you can get over 50% of franchises cost $250,000 or less. You can finance 'em. We can get into all there's 10 different ways you can finance a franchise, but but returns it's a business. So for people to say I wanna make a lot more than a hundred grand great, own. 10 of 'em, own 30 of them, right? Like the best part of franchise is the duplicate. It can be duplicated, right? You can buy new locations, you can open up more territories and it's plug and play like you use the same point of sales software. You have the same uniforms, you follow the same like processes. You have the same marketing. And whether you're opening 'em or buying 'em, like we, a lot of our growth has been through buying existing and it's literally plug and play like it is the employees on day one, like it's business as usual, like that first week their paycheck comes from a different bank account. But like we're following the same core process that allows someone to, to grow very quickly. Versus if I was buying independent shops, for example, or you were in an independent HVAC company or landscaping company or whatever it is, and you wanna buy other independents to do. Similar roll up strategy. Every single one you buy, because it's independent, is gonna be unique. They're gonna use a different point of software, if any. They're gonna not gonna have these systems in place. They're not gonna have. All this stuff and so you're gonna wanna put them in place, right? And people don't like change. So now you're going in, you bought this new thing, you're gonna tell 'em, Hey, I know you've been doing this thing for 10 years, but we're gonna start doing do this way. Yeah. Yeah. You're gonna learn my point of system. You're gonna learn this. We're gonna change your pricing. We're not gonna, we're not gonna do X, y, and Z services anymore because they don't fit with my business model. And then, you're gonna lose like half the staff cuz they're like, I don't like, this is not how we do it and maybe, whatever. But in a franchise, when you're, especially when you're buying existing ones or even opening new ones, like the playbook set. There's no there is some little variability obviously in, in how things are done, but like 90% of it is the same. And so that's what makes it duplicatable. Where, so even if you have a business and it only makes, 50,000 in a location or whatever, like subways don't make that much money. They make. 40, let's say, let's call it 40 grand a location, but their overhead's very low. They're very stable, like it's not too seasonal, and the guys can own 10 of them relatively easily and bring it in, 400 grand a year with not, this huge variance in fluctuation. So

yeah. Anyway. All right, man. That's fantastic. So a cool thing about this show is none of this is, None of this stuff we talk about is easy, and I don't think that people that are listening to this are looking for an easy fix or an easy solution. Yeah, because they wouldn't listen to this podcast. So the people that do listen to this show take massive levels of action. I wanna punctuate what you said there, and I want to go into a little bit of a framework and then I want to get into how we go about valuing franchises, how we go about purchasing franchises, and then what levers we can pull to manage a franchise. So first to punctuate what you said. Essentially you say that you could put down 250 k to get a franchise, and then 250,000 is buying a hundred to $200,000 of recurring cash flow net to you as the. So you're taking one lump sum of the cash and then you're just duplicating that and recycling that over and over again. So that's a freaking no-brainer when it comes to the levers of control, is what I thought about. Yep. If you think about your W2 position, ladies and gentlemen that are listening, if you're in a corporate position what are your lever levers of control for income generation? You can do work more hours, you can do better, and hope for a promot. Maybe you get 10% more. Maybe you're in a sales position and you pull some levers to do more prospecting, more presenting, and you can increase your commission in real estate. You can buy distressed properties, you can renovate them, you can fix them up. There's some degrees of control. When I'm looking at what you're saying, what's attractive to me is not only the cash on cash return, but also you have different, a lot of different levers that you can. To control how much income that you're generating because now we're having a business conversation. And if you're a good operator, you can kick the ass of any, anyone that's a terrible operator, which I would imagine is the majority, is that spot on

that, that is accurate. And a lot of what makes a good franchisee is a good manager. It's a good manager of people like you. So if in, so someone has a W2 job now and they're like, they're in a role where they hire people, they identify talent, they can bring them in, they can sell them the vision, right? They can train them. And this is what I want you to do. They can hold them accountable, which means they're gonna follow up to say, Hey, I asked you to do this thing. Did you do it or not? They reward they celebrate successes when the team does a good job, right? They discipline when they need to if someone is good at those things and does those things now. They are unlimited possibilities cuz that is what it is to be a franchisee like that is the majority of what we do. For the most part, most franchises, including, mine, are in the people business, right? , we just happen to fix cars. You could be in the people business and you just happen to clean houses or do home healthcare or spray mosquitoes or drop off dumpsters or sell popsicles. Doesn't like we're in the people business cuz if we weren't the people, like people, businesses are hard to. Thus why they're franchised versus correct. If you're just doing product, like you're just selling product, you're selling software, Walmart doesn't need franchises cuz it's a retail business. Like they can interchange, right? The people that stock the shelves and the check people out right? Manage it. And it all pretty much runs the same, right? So for the most part, most, a lot of franchises are, have a service component to 'em. They need local owners, they need people who care about finding good people who hold 'em accountable, who try to reduce turnover, right? Who wanna celebrate success, all that stuff. So I love that. And then is, sounds good at those things. That's the key. Like you may think I'd have no business experience. I don't know how to run a business. But if you can manage people, the franchise or will help with a lot of the other stuff in terms of 1 0 1, some of them do bookkeeping, some franchise, or do your bookkeeping. Some of them help with like resources for processing payroll. Like a lot of the stuff that people don't know how to do and they've never done it. It's really not that hard. And

yeah. And when we talk about real estate, we talk about driving for dollars, right? And then when we talk about franchises, There's so many franchises. I'd say probably 80% plus that don't even pick up the damn t. Hi, they, yeah. So the opportunity here, ladies and gentlemen, is insane because think about this. You can buy a franchise at a multiple of revenue, which we'll get into that very shortly, how to evaluate franchises so you can get one, and you can look at this franchise and be like, okay, they're doing X amount of revenue, I'm gonna buy them for this price. And you know that you can immediately go in and. Input your systems and input, change the customer service. Start answering the phones. Do a little bit, throw it online. A lot of these places don't even have websites and stuff, and you can just make those simple changes and immediately increase the revenue, increase the valuation in the multiple, and then skyrocket your net worth. Holy crap. So talk about this. Let's talk about how do you, valu. How do you evaluate a franchise and what are you looking for in these deals with like your distressed real estate of the franchise world?

Yeah. So there's two kind of avenues here. One is, yeah, you're buying existing franchises. The other way is you're developing, you're opening new ones,

right? We'll start, we'll just do, we'll do the entire conversation based off of acquiring other existing ones. . beers: So a word of caution prior to ones because Okay, then nevermind. I'm talking outta my mouth. No, we should talk about both . Why? because franchisees want to sell to other franchisees. It's easy. Very fair. It's much e like, like I, I'm able to buy so many cuz I'm a franchisee. If someone wants to sell and I'm in their footprint, they know I. Like I, I'm gonna, I'm gonna deliver, right? I'm gonna, I'm gonna score the touchdown. Versus you sell, yeah. You list your business on Biz by Sell, and you get all these ran people and then the franchisor has to approve of them. So they have to be financially qualified. You have to disclose all this information, send 'em tax returns. It's like selling anything else, right? But at the end of the day, like they have to go through training. And what if at the five yard line before. Sign all the docs and do all the stuff. They say, Hey, this thing isn't for me. Or the franchisor. Like I've heard of franchisors after they go through training, be like, this guy's like an idiot. We don't want him in, and then they can kill the deal, but wow, okay. They're not gonna kill the deal for me because I'm an existing franchisee and as long as obviously I'm like in good standing with the franchisor and I pay my bills. So I, but so for a lot of people, they wanna buy existing. It's really hard to get the first one. And so a lot of times what I see people. Is they open the first one from scratch, right? Okay. So they develop the first one, and then all you need is one. All you need is one to have your foot in the door, and now you're part of the community. And then if you want, you could do an acquisition for everyone after that. So what does that process look like? Right now I'm a guy or a girl, and I'm sitting here in my corporate job, I'm making maybe a hundred, 2000 30,000. I've got a couple Airbnbs in under my belt. And I want to open up a franchise. Walk me through this process.

Yep. Yeah, so I think the first thing is the most important thing is assigning what your role is gonna be. And there's this, there's this that, that spectrum I talked about, right? So for some people, they are gonna be like not very much involved. Right where they are. Maybe it's, then there's two ways you can do that. One is you hire an operator who's gotta really run the day-to-day of the business. The other way is, there are some that you can. operate a little more ad hoc depending if you have flexibility in your work schedule, there are some franchises that you can run. Maybe you're the lead like salesperson on it where you're handling the calls, you're closing the deals, and then it's going over to your team to, to handle. And it's really knowing how much time you gotta allocate towards the business. And if you say, Hey, I can. Whatever, 20 hours a week, like I'm gonna be, I'm going to, I'm gonna lead the team, but I'm not gonna be the person like in there every single day. Yeah, that's gotta figure out that franchisors need to know that. The other part of it is, if you're gonna hire a f a GM to run it, like you, you're gonna need, you're gonna have to pay them 50 grand or 40 grand or whatever and so that's a huge amount. Profit and kind of risk that you're gonna be taking on. And so it's really deciding, what level you're at. And so from there you decide your role. After that it's, what is, so let's say someone's role is, they don't wanna hire gm, right? Cuz they're, maybe they're afraid of the risk of, of bringing on that employee. Okay. For example, there's a great Popsicle franchise that I. and it is it's this, it's like an ice cream. It's basically an ice cream. It's like a fancy ice cream truck. Okay. That sells forme, popsicles blueberry cream cheese, like whatever. Then Like dipped cold brew, whatever I don't know, all these fancy flavors people down in like Austin would love 'em. Yeah. They

just make white people sweat. They're just like, oh my God, look at this flavor. . beers: Yeah, exactly. Margarita and mango, whatever, like all these fancy stuff. . So anyway, it's a kind of business. It costs like, whatever, 60 grand or less, you can get into it, buy, you, get payments on the truck and stuff. And so the role is, You buy these popsicles for a dollar and you sell 'em for five bucks, right? You make 'em $4 a Popsicle, and then they help you get into these events. So then get scheduled to go to all these, outdoor festivals and music concerts and like high school football games and college football games and, you can do wholesale to other local places. And, either you can go to the events or you hire kids for a couple bucks an hour and they're going out. , selling a couple hundred popsicles at a time, or you find a retailer and you can wholesale a bunch of popsicles and so thing, you get into it for 60 k and maybe you can making it so it's making 60, 70, 80, maybe even a hundred thousand if you can really start cranking it. Obviously if you're in Texas and it's warmer climate, you have a longer, much longer year round season than if you're in Phil. But there is there is something for everyone depending on how much time they want to put into it. That's the first thing. What's a good resource for somebody? And this is really cool that we're having this conversation cuz I'm completely ignorant to all of this. So off the top of my head, I can't think of, what franchise I would want to open. Because we're saying, so for the sake of the example, we're beginning with the first one in my mind as well, where I'm at in business, I would immediately underwrite hiring an operator. Like where I'm at right now and where you are, like, we wouldn't be doing this ourselves, but for somebody, I'm doing the sake of the example. For somebody that's maybe like really trying to exit this corporate job and they're really trying to get their freedom as fast as possible, what, where would you recommend, like where do they even find the ideas for these different franchises that are even. Because maybe they're like, okay, I know about subways, I know about gas stations, I know about Taco Bells, I know about tire shops. Like besides Biz Buy, sell are there any resources that you could recommend for somebody going through and looking at what's out there and available to begin?

Yeah. You can follow me on Twitter. You can follow my website. Prime Beers. No. So that's what I help people do. Now is this where currently I work one-on-one with people really working on developing a lot of content and a community all around this? Cuz this is the biggest, this is the biggest problem, right? Is there's 3000 franchises out there. Like how do you pick one that's right for you? And there's a whole world of franchise consultants is one of the avenues. I became one and joined this network because I have so many people coming to me through, primarily through Twitter and through my podcast, wanting that help. And as in, in all franchise consultants are gonna be pretty, pretty similar in this way, where they have this portfolio like, and the one I'm part of, we have 700 different brands. And so it's a big, it's a big one. A lot of brand names, a a lot of great ones. And so like I would ask you a bunch of questions in terms of how much liquidity do you have? How much total investment are you looking for? Are you looking for, I have a whole list of industries we would look at, right? Child childcare, home healthcare, cleaning, auto repair, like there's a whole bunch of 'em, right? Sure. Home services and then based on all these things and what I think you would be looking for, I can put all that kind of into these, this database and then it can come back with, here's a whole bunch of franchises, right? That could fit it. And the way I work, and a lot of the consultants work is similar. We're there, they're then doing territory checks to see, all right, you're in, Austin, you wanna open up X, Y, and z, a service-based business, what's available? And then they, we can quickly see what's available, what's not available, and then at the end come back to you and present, four or five different options if you'd like 'em set up intro calls with the franchisors and then walk through the process of just helping. Explore it. Of that's freaking awesome. Coach in the corner.

So yeah. In full transparency, like for me once again, like this is me selfishly I wouldn't even care how much you would charge for that. I would just be like, okay dude. Yeah. Walk me through , help me out. Yep. Cause you don't know what you

don't know. Yep. And anyway. There's like franchise Gator, there's a bunch of other websites out there too. Someone starts exploring. A lot of times people who didn't request for information they end up getting to a franchise consultant. The problem with the industry, to be totally honest, is like some people get into it, become a quote franchise consultant. They have like zero experience actually running a franchise. They have really, they've, they might have a ton of experience selling them, but they like, my competitive advantage is I know this thing inside and out. And so that's why I'm pretty successful in helping people find something they love and not. something that's like convenient. Very cool and.

Sweet. Let's jump into the valuations right now. So let's jump into how, when you're looking at these different franchises. So now we've gone from deciding that we wanna do franchising, and now we've th found a franchise. We're looking at a couple of different PNLs for just your sake of what you do. We'll just do like tire shops and auto shops. So when you're looking at auto shops to buy, , how are you evaluating these business? . So I know how, I have a general understanding of how you do this, but it'd be really helpful to break it down. So

let's say you're already in you're in a franchise, right? Because if you're just buying one, the franchise door tells you what it costs to get in. As part of the process, they'll say, they'll give you a range, it costs whatever, a hundred to 200 or whatever, 200 to 300.

They give you a range. And then when you're beginning just real quick, so when you're. Is that something that you can do any creative financing on when you're starting your own original one or is that something where you're just like, 200, 250 K, you need to have that cash liquid, throw it down, or can you do seller financing on something if you're beginning it from scratch?

Yeah. So yeah let's get into that. Yeah. So there's there's 10 different ways. I'm just gonna pull 'em up so I don't forget 'em all here. That you can get financing on a franchise and. , you got cash, right? That's whatever. So let's say it's, let's say it's 250 K. You got 250 K in cash. You pull out a checkings or saving. lot of people don't have that, right? And so then it limits them to lower cost. F franchises broke people, man, don't

got two and then 50 K on you. , get outta here,

right? What do Grant Cardone say if you're not making 400 K? You're like a failure. Yeah. Anyway . All right, so that's, we got that right. And there's downsides. Even if you had the cash, there's downsides, like you might be able to get a better return somewhere else in and all this stuff. Yeah. Number two, you can hit your HeLOCK, right? So if you've got a house, personal or investment property, you've got equity in it. It's much, it's very easy. It's lowest cost. It's interest only. The real estate guys know this, know, you might be able to pull. 50, 60, a hundred K out of a heloc, right? Similarly you could do stock margin loans, right? So you've got a, you've got stocks. A lot of brokerages will allow you to get up to 50% loan against your stocks. The problem with that, obviously if the value drops, you might have to put some cash in with the margin call. If people have life insurance, you can get loans against cash value. And there, there's actually a way of doing a 401K rollover to start a. It's called a Robs. So basically you have a 401k with your old, your w2. If as long as you have a 401k and you're quitting your job, so you're quitting your job, but you get to roll over a 401k and there's a, you have to use like an intermediary and it's it's kinda like a 10 31 kind of deal. But basically you can start a new corporation. The corporation has a retirement plan. That 401K goes into that retirement plan, which then that cash can then be used to fund the. and you can fund the franchise. You can fund. And

that's with the traditional 401k?

With the 401k, yeah. You can

roll it. What, where do the profits get distributed? Where does the income get distributed? Because I know if you do that with real estate, then the cash flow goes back into the retirement

vehicle. No. So how it works is the shares are owned, I dunno the 401k buys shares in the company and then that's how you get the cash. Got it. It owns some shares in the. And y yes, there are some rules around it. There's companies that specialize in this thing. Okay, cool.

We can move on that. What was that called?

A Rob? It's possible. It's still, it's called? Yeah, it's called a rollover. Rollover. Rollover. Business startup. R got its Robs. Cool. So those are all kinda like the self-funded options, right? That you're using either cash or like equity that you have in either, your life, your stocks, your house, whatever on other people's money. Some franchises. In-house financing. So they may say, the franchise fee, which we can go into some of the fees and stuff, a franchise fee could be 40 grand and they could say, hey, some will say, Hey, you gotta pay us. Others will say, pay us 20 K and then 20 K over X amount of months. Some will, you might be able to get into $0 down and spread it out. So that's always interesting. They also might do it for equipment too, if it's like, if the franchisor is like you're paying the franchisor to outfit something, they may offer a predefined in-house financing. . You can also get equipment loans. There's a number of vendors that'll do unsecured personal loans. If you got good credit where you're, it's higher interest, obviously higher fees, you're not putting up any collateral and they might give you, 50 grand, 60 grand, a hundred grand, depending on, what you make. And finally, sba, right? Sba, you can get a seven, a loan that will fund up to 70% of a startup, f. And that includes working capital that includes startup, like the franchise fee and all the other stuff. And so a lot of people do that route and you can stack 'em, right? So you could say, oh, I got 25 K in cash. I'm gonna hit 25 K for my heloc, I'm gonna get an SBA loan for. , it's 150 k, and then, friends and family, maybe I can raise some money from friends or family and give them, some sort of return on it. Yeah, I there's tons of different ways to be creative. The main advice is don't overextend yourself. Don't put all your eggs in one basket. You sometimes it takes more time to build a business's sales than you expect. And you want, you wanna have cash on the side to be able to support it. Like running outta cash is like the number one reason businesses fail. Yeah, fair. Be conservative. Don't like, don't go crazy. You can always add more units too. Like it's very easy, like a set up front to, to add 'em. But you don't want to overcommit and spend all your money in the beginning before you have this, you've proved it out, if that makes sense. Yeah. And then when

we go back to the cash on cash return conversation, like how I would view this is, doing the sba, doing the seller finance, doing some type of creative structure so that you could be able to have as low amount of cash in as possible. So talk about the fees, talk about the franchising fees.

Yeah. So this is like the cons, right? So we talked a lot about the pros of why. Franchising is awesome. A lot of the fees and why it's maybe not as awesome are fees, so you're gonna have, the big one is they're gonna charge an initial franchise fee up front, so it could be. 30 K, it could be 40, 50, 60 k. Some of them, if it's a territory based one, charge you based on how big the territory is. So if you're buying a bigger territory, you're paying more, it's usually on a per population calculation, but on average 30 to 60 K and that, that buys you. A certain amount of time. It could be 10 years, it could be 15 years, it could be 20 years that you have the rights to operate the business in that area. You also could have, royalties. So most franchises charge a percentage of sales anywhere. Most charge anywhere from like five is on average, 5% of sales. Some charge a little bit more, some charge a little bit less, some do tiered structures. It, It all depends, but let's call it like, my discharge is 5%. We. a million dollars in a month or whatever for, our business, a couple stores, whatever it is, we're gonna pay, $50,000 that month to the franchisor that is gonna go to a, their profit center. B the support. Like they use that money to, to pay for their field support and know, run the business. So you've got, you got royalties. The other half of that is advertising. So most. An advertising that is normally very similar to whatever they charge in royalties. So my, for example, also charges 5% of that, but that money, so we got another 50 grand that's going into an ad fund. And then ad fund, could fund some dma, some se some search engine optimization could get us on. , YouTube and MLB playoffs and all that other stuff. And in, in terms of the downside is you don't have much control over that ad fund money. It's like they get to spend it however they want. And then if you want more local control you, it's out of pocket on you. And when I look at a, so some people say I owe 10%, it's like a ton. I wouldn't spend that or it's too much money. I look at it as, you gotta spend money on marketing either. in advertising. Sure. To get leads. So if you say, either way, I'm gonna spend 5% which is a pretty like standard reasonable number. So then it's really the 5% that you're paying in royalties, is that worth it? Are, and the question is, do you get enough support in training that makes it worth it? And for me, like I can open up a brand new store in a brand new location, and I can be profitable by month three because people. , Midas, they're coming in. If I was Brian's Tire and Auto, like there's no way, there's no way that would happen. And then it's, the community aspect and all these other features that you don't have to figure this stuff out. So for me it's worth 5% of the sales to do

that. So there's a quote that comes to mind from that. And one of my, one of our buddies Chris Benson actually told me this quote and I definitely agree with it, where he talked about true. , right? So profit is, revenue minus expense, but then like true profit is revenue minus expense, minus headaches. So for this I'm, I view this and I say, okay, so I make 10% less, but my headaches are substantially reduced. I think it's a no-brainer.

I can talk too, just real quick. We talked about the fees. We should also talk about some of the other down. Sure. People considering this, the big one is, lack of, let's call it independence, right? So like you, you're buying the business in the box, which is the pro, the con is you gotta stay within the box for the most part, right? And you may have, like for me, I wanted to open up, I wanted to try opening up a smaller footprint store. I wanna try a gas station store here in the northeast. We have tons of little gas stations. I have three bays. And I figured, hey, let's put a mighta shop in this little three bay thing. We get some, we wouldn't run the gas station though. Someone else runs it. We're just running the Bayes. I thought it was a great idea and they said, nope. They denied the location. Said, we don't have any of those. We're concerned about the liability and of the image and all this stuff. And like I had to let go of the idea. And because they just slapped your wrist and said no, because they said, Nope can't do it. We're not gonna, we're not gonna agree with, this site because it's outside of the. right now. They said if it didn't have active gas and it's just a small footprint store, we'd probably approve that. But they didn't like the gas component. They didn't like the retail convenience store kind of component of it. And you try to push the limits as much as you can, but at the end of the day, they, they of want the things to fit with them. That was something that I would think is a big one. And also like they could potentially limit growth. So say you're like really aggressive and you want to grow and you want to open up all these location. And some of them will say, if maybe you've got I have this painting franchise I'm aware of, and it like, you might have two territories and you wanna buy two more. They wanna make sure that both territories that you have are like hitting their metrics and that they're doing well. And if one of them is floundering, you're not making any money and you're not really spending any time on it. They're gonna, they're gonna, they could deny. The acquisition or the future like openings. Cause I said, you're not even you're not even getting the one you have already growing. And now you're gonna take on two more. What are you doing? Go get that one fixed first. That makes sense though. And it does, like in a business sense, it makes sense for me as if I was the franchisor, I'd probably do the same thing. Cuz it's yeah, now your focus is gonna be even more diluted. But for that franchisee,

of course, then there, there're a shit franchisee . beers: you gotta be aware of that, right? So you ability to grow like someone else has gotta punch your ticket to, to get there. On the flip side and the positive things, they bring me deals, like I've been brought multiple deals to buy from the franchisor cuz they had a business meeting with them and they say, Hey, I'm ready to retire, or I wanna sell, how does it work? And they say, Hey, let me go talk to Brian if he's interested, I'll make the introduction. And, they bring it to me and I say, this is great and we do the deal. And so they can bring you deals and they can also cut 'em off from you. The, the more of the stories you, if you're a good. They want you to succeed. If you're better than average and you know you have good relationships and you do a good job. Like you, you have this whole power behind you. And if you don't like that power is pushing you in that other direction, right? Yeah. The way I view it is you're of like a ship with a massive sail and you've got this massive headwind behind you, like just blowing into the sail, propelling you in the right direction. But if you've got holes in the. You're not gonna be successful. Yeah. So what are some areas that you completely messed up on when you were first getting into this? Now I know that this is a little tongue in cheek and a little caveat because there's nuance to it because you got, you were raised in this you had your father own, I had

two others. So we had the two others. I'll talk about the two others. So we. So we had two other franchises that we started in 2013 and 2020 that were outside of automotive. One of 'em was, oh, one of 'em was an automotive parts business. The other one was a truck washing business. And, I don't know, I, I guess it was naivety to think that, hey, we can open this thing up and we can put a manager in place and, it'll just, sales will grow and it'll just make. Like we treated it as a side passive thing. And I think, in reality like sales grew, but we never grew to be I profitable. Like we never grew to the point that it became, it was easy and I think, know, it takes a lot of work to get the plane off the ground to ex to really accelerate it. And I, I was involved in the beginning, but then Didn't really get it and then it never got up to the altitude that it should. And I think it was, I dunno if it was ego or just passion or whatever it was, but like I lost interest in it and then it was it's harder to get out then when you have a business that doesn't make money. Because who's gonna buy it? Who's gonna buy your problem? And that was the biggest mistake, is I think, I thought it was gonna be too easy and I wouldn't have to personally invest as much of my time as I actually did. Now, if it was my only thing and I didn't have Midas and I was a hundred percent in both those businesses, I would've made 'em successful. Like I've, I have no doubt that both of them would've been. . It's just, I didn't invest the time and then thought I could, it would do well. And so going forward for us, it's like that for us, it's the operator. It's if I don't have the time, but maybe I, we got the money, we've got the expertise, like we've got a business model that we like. If we can find somebody who could be a partner. With us then that's perfect. Because he can invest the time, he can have some skin in the game. He can be a franchise, he can be a franchisee. Too, like with us and and then we can be there as the coach, as the advisor and help him see all the all the issues. I think for us, that's what I learned is that I, if your time's like diluted, right? And the more things you take on, the more things you say yes to, the more dilution you get. And for me, it was like the having multiple brands that I was personally like in charge of versus having partners who really could, who could be in charge of it and their time's a hundred percent focused. And I'm more, in, in an executive board member seat if you will.

Yeah. And I like how that, I like how you position it right now. So what is the current portfolio look like right now? What's the cashflow looking like right now in closing

for the stores that we currently have. Sure. Yeah. Yeah. Yeah. So we have 30 locations we'll do 36 million. In 2023 we expect to do about 40 million, but we did about 36 million last year. And yeah, we net, I don't know, it depends, but eight, eight to 10% something in that range.

Nice. Dude, thank you so much for coming on, man. This has been freaking awesome. I love, I've loved watching your journey and I've loved watching you progress and getting way smoother with delivery and dude, this is insane to think about how this episode like and how you and I even conversate and how your brand is and how everything like now to a year ago, just from putting in reps on podcast. It's insane. And that's just a testament. Where can people find you to learn more about this? If they're interested, if they need your help to pick out a franchise to scale their franchises, where can they reach you? . beers: Yeah. The best is my website, Brian beers.com. From there we'll find links to I'm got this course in this community I'm building to teach people. A lot of what we talked about today, which is like intro to franchising. Like What's all the things I need to know to decide is franchising right for me? So it's that decision point from zero to signing the paperwork, right? And so there's a ton that go into that and, the royalties and the legal structure and how do you build out financial model, all this stuff. And so I've got I've got some great education around that. And then more importantly, it's the community. Like you've got a great community. I'm part of it and it's, live, live calls with me to determine, to answer questions, to bounce ideas. We bring in franchisors to. Pitch their business and then I'm, we're, we can ask questions live and determine, Hey, is this something I like, is this something I don. It's a journey to learn about it, right? And it's a huge commitment. It's 10, 10 or 20 year contract that you're signing that obviously you can like, sell and get out of it, but you're still signing it. And so you really wanna make sure, like you love it. And you gotta get educated on it. The more educated you are, the more confident you will have in your decisions. And yeah, Brian beers.com, you can find that stuff off. I'm pretty active on Twitter is my. Like median you can find me there. And I also have a podcast business with beers. Two episodes a week. One I talk about on just general business. I bring on authors. We talk about growing, scaling businesses. And then I have one on Fridays that's franchise Fridays and that's about franchising. So I do solo episodes there. I bring on franchisors, franchisees, and just that one's more. around franchising. So sweet brother. I love it. So now everybody go check out Brian beers.com. Check out Business with Beers podcast. And with that on this podcast, this has been Brian and Brian with the Action Academy Podcast, signing off. All right.